Fed Considers Bank Program Disclosures

Published 7:00 pm, Tuesday, January 21, 2003

The Federal Reserve is considering whether banks should be required to tell consumers more about the costs of programs that let customers overdraw accounts by covering checks that would otherwise bounce.

The central bank recently asked for public comment on the so-called "bounce protection" programs and whether they should be made subject to truth-in-lending rules that require banks to disclose interest rates, fees and other information to consumers.

Comments are due by Monday and can be submitted through the Federal Reserve's Web site. The Fed noted that under the programs, banks routinely cover overdrafts on checking accounts rather than assessing each customer's situation on a case-by-case basis.

At least 1,000 U.S. banks use the programs to encourage customers with low balances to overdraw their accounts, allowing the banks to collect billions of dollars in fees, The New York Times reported in Wednesday's editions.